Tedi, KiK, NKD, Woolworth and recently Pepco – cheap chains are experiencing a real boom in times of rising prices. According to industry experts, the trend could continue.
Discounters take advantage of the thriftiness of many consumers – and not just when it comes to food. In more and more industries – from fashion retail to household goods – low-cost suppliers are driving the established competition ahead of them and showing economic strength.
Example Woolworth: While many well-known fashion retailers are reeling from one crisis to the next, while well-known brands such as Hunkemöller and P&C are sliding into insolvency, the discount chain Woolworth, with its German headquarters in Unna, is experiencing a real boom. Woolworth is currently planning to expand its branch network from 640 to more than 1,000 stores across Germany.
Record sales and expansion
A million visitors a day ensure good sales for the discounter: from 2010 to 2023, Woolworth was able to increase this from 200 million euros to around one billion euros. And things are similarly successful at other discounters in the non-food sector. Action, for example, increased its sales by 27.8 percent to 11.3 billion euros in 2023 compared to the previous year. KiK increased by 14 percent to 2.5 billion euros.
Overall, the market shares of discounters in Germany are still around 15 percent of non-food retail. There is still a lot of room for improvement, says industry expert Thomas Harms. Internationally there are market shares of up to 45 percent.
Newcomer Pepco
And so it’s no surprise that new players keep coming onto the market and want a piece of the cake. Current example: Pepco. The chain opened its first branch in its home country of Poland in 2004. The discounter is now represented with more than 3,300 branches in 18 European countries. Now also in Germany.
2,000 branches are planned in this country over the next four years. Pepco wants to shake up the German market with this. For comparison: KiK currently operates just over 2,700 stores, Tedi around 1,900 branches.
Success lies in the range
There is still no cutthroat competition, says Harms. It is important to have a well-thought-out range in order to differentiate yourself from other discounters. Since Pepco’s range includes clothing, furniture, decorations and other household goods, there is a lot of competition for the newcomer in Germany. When it comes to clothing, KiK and NKD are mainly found in rural areas. Tedi and Action specialize in decoration, household goods, drugstore products, DIY items and stationery.
These are often everyday items that customers don’t specifically go shopping for. “The items are picked up casually,” says retail expert Harms. In these so-called impulse purchases, the price is the decisive sales argument. It is so cheap that there can never be competition online and customers come to the stores.
No chance online?
And in fact – following this logic – none of the discounters have an online shop. Only Tedi dared to take this step in 2015 in order to supplement the range of products in its branches. Four years later it was over again. “Tedi’s strength clearly lies in stationary retail,” argues the discounter today.
Changing promotional items from a wide range of product categories at extremely low prices: the strategy is working. Those who enter discount stores often leave with more products than originally planned. They were bargains after all.